The demands placed on enterprises that aspire to define themselves as digital or that need to act with true enterprise agility are not insignificant. They are the kinds of demands that require a re-making of the business-IT relationship. They require a whole-hearted embrace of DevOps and Agile development. And they require a modernized mindset about governance of third-party service providers and the role it serves in a company’s overall success.
Let’s face it: competing in today’s market is not just about selecting the right sourcing partner for the right job. It’s about working with those partners over time to make sure they deliver what your business needs. And the little-known secret is that the selection process and the governance process must be tightly tied together from the beginning.
Tying them together gives enterprise buyers and service providers the chance to act together – to define the solution and measure its efficacy together. This is a new form of partnership – supported by what we call Coactive Governance – that creates a deeply collaborative relationship needed for today’s sourcing environments.
Building coactive accountability in this way increases the level of collaboration between parties throughout the relationship. This includes more intensive involvement of business stakeholders in the selection process that supports the IT and procurement organizations, so the business can fully align and embrace partner governance overseen by IT. It starts with a selection process centered on three goals: focus, participation and dialogue.
- Focus: While multi-tasking is the way we conduct most operational meetings and most day-to- day work, studies show that it is highly inefficient when dealing with complex, stressful or new decisions. Enterprise leaders need to focus their thoughts and analysis as a management team in defined and structured joint sessions before they engage potential providers.
- Participation: People own what they help create. When enterprise teams and provider representatives enjoy greater participation and influence in the decision-making process, they produce greater results.
- Dialogue: We’ve long found that dynamic, interpersonal conversations – as opposed to one-sided presentations or Q&A sessions – increase understanding and allow for rapid decision-making. Meaningful dialogue between enterprise buyers and potential providers is more likely to result in better alignment, mutual ownership and longstanding commitment to a healthy partnership.
This is to say: deeply embedded “us versus them” thinking does not cut the mustard. Too much depends on these relationships in today’s competitive marketplace. But getting to a state of true collaboration, transparency and trust means enterprises must rethink their approach to sourcing.
ISG FutureSource™ is a unique, collaborative method for accelerating solution design, improving alignment between buyer and provider and building stakeholder acceptance. The idea is to begin early – during the selection process and in the initial stages of transition, whether that be with a new partner or during a relationship “reset” with an existing partner. ISG FutureSource™ lays the foundation for the kind of integration required for advanced development and emerging services today – and for Coactive Governance.
ISG FutureSource™ guides enterprises through a careful process to help them define and refine their future-state operating model – a critical step in identifying and evaluating providers that know how to deliver services – and ensure that enterprise stakeholders will know how to receive them. Looking inward to define the optimal operating model creates important sourcing inputs beyond traditional service levels. What is the desired user experience? And what are the perceptions of what makes for collaboration and what creates innovation to deliver quality?
ISG’s new FutureSource™ transaction methodology hinges on a series of four collaboration and alignment sessions (CAS) that promote early interaction and lay the foundation for joint accountability for enterprise stakeholders and their potential partners.
ISG FutureSource™ Methodology and the position of the CAS workshops in the process
- Define Outcome and Scope. The first step is to achieve internal alignment among key business stakeholders and executives who will make the sourcing decision and be responsible for executing against the goals and scope of this work. The Outcome and Scope (OS) workshop allows the internal project team to present and review work that has been completed to date, discuss critical issues and market trends and agree on sourcing options based on potential risk, economic data and a deeper understanding of what is required to move to the future desired state. The OS workshop incorporates the results of ISG’s Sourcing Readiness Perception Study, which highlights potential sourcing or re-sourcing opportunities.
- Consolidate: Provider Scan. The Provider Scan (PS) workshop allows the buying team to filter an initial set of candidate providers and conduct a capability interview in the form of a “verbal RFI.” In the span of just a few days, enterprise executives gain important insight into a provider's capabilities, agility, culture and responsiveness. The outcome is a detailed ranking of all participating providers and a “short list” of those that will be invited to submit a proposal for the identified sourcing opportunity.
- Evaluate: Solution Preview. The Solution Preview (SP) workshop allows providers the opportunity to “test drive” their solution, transition and governance approach with key enterprise stakeholders. This is a time when the buying team can invest a full day with each of the potential providers to vet innovation capacity, creative solution design and cultural alignment. Enterprise stakeholders create a quantitative and qualitative score to evaluate each provider – and the two parties have had a chance to further develop a working relationship.
- Decide: Operational Alignment. Once a provider is selected and a contract is signed, the Operational Alignment (OA) workshop drives rapid alignment between the enterprise and its provider(s) for early assurance that both parties are moving in a common direction. It is specifically designed to document handoffs and processes and make sure both parties understand the interaction points between them. This level of planning and coordination creates greater cohesion, buy-in and alignment for the sourcing relationship, reduces the risk of process misalignment or operational breakdown and gets the relationship off on strong footing for long-term success. This is especially important for enterprises that do not enjoy an institutionalized service management model or strong alignment across business and IT.
Bringing the provider and enterprise teams together in this structured way allows them to understand each other’s operating processes and associated touchpoints. It allows them to “stress test” use cases and agree on how teams will address given scenarios during and after transition. Embedding the notion of “coactivity” throughout the provider selection process improves the odds of getting the relationship right from the start because both parties gain an early and mutual understanding of process-specific activities, delivery expectations and respective roles and responsibilities. As its most basic, it helps the enterprise think actively about how to adopt a different working attitude, and it gives potential providers insight into what the enterprise truly values.
When conducted in this way, the selection process sets the stage for Coactive Governance so an enterprise and its providers can align on process and operating principles on an ongoing and proactive basis. Which can make all the difference.
About the Author
Beth Anderson is a sourcing transition and change management leader who is passionate about ensuring that clients are equipped to realize the full value of their sourcing relationships. Her decades of experience span IT and shared services sourcing and insourcing, managed services transition, supplier management and governance optimization, operating process alignment, retained organization design and employee readiness, and sourcing communications across multiple industries.